Templeton\’s Mobius says he\’s buying tech stocks; others not so keen

Last week\’s blowout for tech stocks doesn\’t look to be letting up, at least in the very near term. Facebook
and Yahoo
are among names under pressure. Electric car maker Tesla
is also among those so-called momentum stocks getting dented.

Laura Mandaro/MarketWatch.com

Mark Mobius

After suffering its worst session in two months on Friday, the Nasdaq Composite is down again as the new week kicks off. The situation also played out in Asia, where Tencent Holding
sank 3%.

\”If you look at Tencent, for example, it\’s come down about 20% and that\’s a pretty good correction,\” said Mobius, though he wouldn\’t divulge on the companies he is buying. Bloomberg pointed out that his Templeton Asia Growth Fund has outperformed 88% of peers this year.

Of course, Mobius\’s big thing is emerging markets and clearly this isn\’t saying much about his opinion on the Nasdaq. Emerging markets are the underdogs these days, as the prospect of the Fed taking stimulus away hit those markets hard earlier this year. Even as Mobius was talking up some tech stocks, others were reminding that more pain was likely to come.

Keith McCullough, CEO of Hedgeye Risk Management says some of the valuations embedded in social media stocks right now are \”scary.\” He started calling a bubble on social media stocks at the beginning of the year, and is bearish on stocks like Twitter
and Yelp
specifically. He said they haven\’t had any long positions on tech stocks since issuing a sell signal on Apple
early last week.

The big problem he has with \”bubble-multiple tech\” is that he expects U.S. inflation to ramp up and growth to slow. Under that macro scenario, he says, equity markets tend to see multiple compression — when a company\’s shares do not rise or may even fall on strong earnings due to investor skepticism on growth prospects. McCullough says he saw no good news in the jobs data because growth in non-farm payrolls, on a two-year average, and private payrolls posted their lowest rates since Nov. 2012 and August 2011, respectively.

Macquarie\’s head of U.S. market strategy, Dane Leone, told the New York Times, that there are some fears that the Nasdaq could be at a near-term market peak, with the index trading at 31 times the reported earnings of its constituents, twice that of the S&P 500.

Others are sticking it out, at least for certain stocks. Cantor Fitzgerald analysts said in a note on Monday that they are staying positive on Internet names in general, and \”higher-quality\” stocks such as Facebook and Google
. Volatility will continue short term, but unlike McCullough and others, Cantor analysts see an \”improving macro environment and superior relative growth and margin expectations out of this group over time.\”

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